Fight for shrinking orders

Pretoria (SA) – The 2012 State footwear tender, published in March, declined by pairs and value for the sixth year in a row. It also saw a drop in the number of successful tendering companies – this year there were just 5 – and it saw a fight for business between 2 former Conshu stable mates, Dick Whittington Shoes and Jordan Shoes.

The tender was for 237 730 pairs, worth R85 592 893, compared to 265 089 pairs, worth R87 728 120, in 2011. The rate of decline was the lowest in the 6 years.

The only company which grew its share was Dick Whittington, which was awarded 155 939 pairs, worth R67 196 275. That was up from 101 640 pairs worth R55 331 490 in 2011.

Dick Whittington dispensed with 2 other tendering entities owned by the same directors – Richleigh Shoes and Bookize Supply. It secured the entire welted contract, taking away gains made by Jordan (via Motseng Trading) last year.
For the biggest single tender, 48 500 pairs of combat boots for the army, it dropped its price from R649 per pair in 2011 to R619.02 in 2012.

Dick Whittington also tendered for the first time for stuck-on ‘athletic footwear’, and was awarded 29 000 pairs – business which previously would probably would have gone to Jordan. MD Arveen Boodhoo said “I decided that if Jordan was going to cut prices on welted footwear, I would do the same with stuck-on footwear”.

He said Dick Whittington had successfully tendered for stuck-on women’s footwear for the past 2 years – since the company installed a stuck-on line – and the athletic footwear would be produced on that line. “Due to intense competition in the welted market, we were forced to reduce prices in order to retain our market share. This is important to us in order to maintain the employment of our workforce.”

Dick Whittington GM Ashodh Rajaram said that “new developments” in the combat boots last year had allowed the company to negotiate lower prices from suppliers and manufacture more efficiently, and the savings were “passed directly onto government”.

Jordan corporate division brand manager Miles O’Brien said the company had been very disappointed by the award. “We’re trying to resuscitate footwear manufacturing in the Western Cape,” he said. “Those orders were an important part of that. We feel the Treasury should balance orders regionally – it’s not as if we are uncompetitive or that there were big differences in our prices.”
Said Jordan MD Brian Pollock: “I personally do not like the way this particular tender was awarded and one could have a long debate on the pricing thereof, and why certain prices reduced so drastically from 2011 to 2012 when we all know that materials and labour have increased and not decreased over the past year.”

Member Rachmat Thomas said while tender business has been very good for the company, “it’s not something we can expect – we’re just grateful when we get it”. She said ongoing orders for Woolworths, and a pickup in its independent business, meant the company was in a better position than it had been.

While the bulk of its tender work – by value – is for women’s court shoes, which fit in with its normal production, she said the company had picked up new skills and added to its manufacturing capability by making Strobel-stitched slippers for the Department of Correctional Services.

Bagshaw Footwear – once a significant player in State tender business – was awarded just 4 390 pairs of safety footwear, worth R1 288 086.

“There was no police boot tender this year,” said MD Eldon Fortmann. “That was the major remaining part of our business with them. Last year’s order [20 000 pairs] was only enough to keep that track making 88 pairs a day. When we saw this year’s award, we took the decision to close that department. It had been in rented premises in the building next door, and we ended the lease. We sent the machinery to Watson Shoes. We retrenched 32 people, including a foreman who had been with us for 36 years. It was heartbreaking, and I hope I never have to go through a retrenchment again.

“There’s talk of a supplementary tender for the boots, but it’s impossible to get an answer from the police. If there is a tender, we now can’t make it ourselves, although we still have the moulds, and no-one else is going to make moulds for a 20 000 pair order. I suppose, if it comes to that, we could get someone else to make them for us.”

He said the problem lay with individual government departments. “The Treasury is doing a very good job, and I take my hat off to [deputy director: clothing, textiles & footwear] Yvette [van Niekerk]. They’re concerned about the declining number of potential suppliers.”

One other change from previous years is that Jordan and United Fram, both divisions of Feltex, tendered via different companies; Jordan stayed with Motseng Trading, previously a shareholder in Feltex parent company KAP International, while United Fram tendered via Dick Whittington.

The State tenders are underpinned by the orders from 5 main departments: army, air force, navy, police (SAPS) and correctional services (DCS). Other departments are the SANDF’s Medical Health Services (MHS), the Department of Agriculture, Fisheries & Forestry (DAFF), the Emergency Medical Services (EMS), and now the Department of Rural Development & Land Reform (DRD).